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STEVE KORNACKI, GUEST HOST: And I thank you all of you for joining us
at home at this hour. Rachel has the night off. She will be back
tomorrow.

Welcome to another day of this extraordinary shutdown of the federal
government, with workers furloughed and offices emptied, Twitter accounts
frozen, national parks are all closed. This is something we have not been
through in nearly 18 years.

In Washington today, President Obama met with leaders of Congress with
Republicans and Democrats from both the House and the Senate. He also sat
for an interview with CNBC`s John Harwood. And in that interview, he was
pretty direct.

(BEGIN VIDEO CLIP)

BARACK OBAMA, PRESIDENT OF THE UNITED STATES: Am I exasperated?
Absolutely I`m exasperated, because this is entirely unnecessary. We have
a situation where John Boehner, the speaker of the House, puts a bill out
on the floor to reopen the government, at current funding levels, so that
we can then negotiate on a real budget that allows us to stop negotiating
from crisis to crisis, it would pass. The only thing that`s stopping it,
is that John Boehner right now has not been willing to say no to a faction
of the Republican Party that are willing to burn the house down because of
an obsession over my health care initiative.

(END VIDEO CLIP)

KORNACKI: As the president there continuing to point out that while
the shutdown is often described as a fight between Democrats and
Republicans, it`s just as much if not more so a fight between Speaker John
Boehner and a far right of his own Republican Party.

In the era of the Tea Party, the idea of any Republican legislative
leader being powerful in the traditional sense is kind of archaic. Boehner
was never a national fit for where the GOP base is these days. He just
happened to hold the next in line position to be speaker when the Tea Party
wave sent dozens of new Tea Party-backed lawmakers to Congress in 2010.

What Boehner was before that was an institutionalist. He was an
insider. He was a Washington lifer. He was first elected to Congress in
1990 and he`s been there ever since.

He has risen through the ranks. He`s fallen down. He`s climbed back
again, and he finally reached the top of the mountain three years ago. But
when he got there, the problem is he is exactly the sort of Republican
politician, a D.C. lifer, a D.C. insider, that fuelled the Tea Party`s rise
to begin with.

That is the best way to understand what the Tea Party actually is.
It`s a movement that is fighting a two-front war. One front is the all-out
partisan war on Obama and the Democrats that we all know about. But the
other front is essentially a purge. It`s an intraparty purge, within the
Republican Party, against not just ideological impurity, but the idea of
the party establishment.

The Tea Party -- excuse me -- the Tea Party is existentially opposed
to entrenched power, to the people who get to D.C. and then catch Potomac
fever, the people like John Boehner. Long before he was speaker, helped
bringing big government policies like No Child Left Behind.

He was in the right place at the right time from 2010, from the minute
he claimed that speaker`s gavel, Boehner has been a supremely suspect guy
to the Tea Party. This has made an extremely weak speaker. It made him an
extremely speaker from the get-go. We`ve known this the whole time. He
has always been just one false move away from being the next Tea Party
victim.

What we didn`t know, though, what we didn`t know until now is that the
incredible weakness of his first two years as speaker actually got worse.
It got about a thousand times worse because of two events that played out
nine months ago.

Let`s go back to the last really big standoff between House
Republicans and the White House, the one called the fiscal cliff. Maybe
you remember it. The idea was that President Obama and the Democrats
wanted to raise taxes for people making more than $250,000. Obama
campaigned on this in 2012 and he won. There was a New Year`s deadline
when taxes would go up on everybody gave him leverage.

But the right wanted to fight this, so John Boehner decided he wanted
to fight it, too. His strategy was to a plan in the House floor to raise
taxes only on people only making a million or more. He thought it would
give him leverage against Obama. Except it turned out his own party, the
Republicans in the House, didn`t have his back. They rejected their own
speaker`s plan, plan B, it was called, if that rings a bell.

They just didn`t think they could trust Boehner. This was all at the
end of December. It was a humiliating blow for the speaker.

And then things actually got worse for him just after the New Year.
This is when a group of conservatives plotted to deny Boehner the vote to
retain his job as speaker for the new Congress. Congressman Steve
Southerland, he`s one of the freshmen elected in the 2010 elections, one of
those Tea Party freshman who is now a Tea Party sophomore, he met with the
group the day before the vote on the speakership.

But late that same night, he then stumbled on a Bible passage that
seemed to him a sign from God. I don`t know how your education in these
things holds up, but I personally found this Lego rendering from the brick
testament super helpful. The story of David and King Saul from the Hebrew
Bible, David is the one with the red hair, David is going to replace Saul.
That`s God`s plan.

But when David gets a chance to kill King Saul and take over, he
orders a soldier not to go through with it. He orders him not to kill him
and lets Saul remain in power.

In that story of the old testament coup delayed was the one that
Congressman Southerland said. He said this to "The Washington Post," he
said God sent his way, on the eve of their vote on Boehner`s future.

And based on that divine inspiration, Southerland decided it would not
be right to depose Boehner. So, in the next day, Boehner stood by on the
House floor, where the Republicans cast their vote in that speaker`s
election.

STEVE KORNACKI: Now, that spectacle, Republicans calling out random
names in the vote for speaker was an indignity that no previous speaker had
endured. In the end, Boehner did end up with enough votes to keep his job,
but it was only barely. He won that thing by three votes, six votes,
excuse me, including the vote from the congressman who based his vote on
the Bible story.

That is how close John Boehner came to being overthrown this past
January. And that is the John Boehner that we are seeing right now,
Washington lifer trying to lead the Tea Party newcomers, knowing full well
that his fate is ultimately in their hands.

This week, our friend Ezra Klein got a chance to ask an editor at the
conservative "National Review" why John Boehner doesn`t just jam a spending
bill through and end this who shutdown mess, he has the vote, just not from
the a majority of Republicans. That editor told him, quote, "Ever since
plan B failed in the fiscal cliff in January, and you saw John Boehner in
near tears in front of his conference, he`s been crippled."

And this, quote, "What we`re seeing is the collapse of the
institutional Republican power."

If this is true, as it seems to be, that John Boehner is so weak as
Republican House leader, then you have to wonder where he is capable of
doing anything in this situation. Tonight, it appears that Boehner is at
least going to try. In the same editor from "The National Review" posted
news this evening that Speaker Boehner wants to craft a grand bargain, he
is reportedly urging his colleagues to stick with him this time.

Robert Costa reporting, quote, "That Boehner`s chief goal is
conference unity, now with an even bigger unity fight just two weeks away."

Joining us now is Robert Costa. He is the Washington editor from
"National Review" and the guy with the scoop on Speaker Boehner`s grand
bargaining idea.

So, we set up there sort of the story you were telling Ezra Klein, the
story of John Boehner`s particular weakness as speaker. But I wonder,
first, if you could just start out, we`ll get back to that in a minute, if
you could just start out by explaining a little more detail this news you
have today about the Republicans sort of shifting towards a grand
bargaining strategy maybe?

ROBERT COSTA, NATIONAL REVIEW: The big story tonight on Capitol Hill,
Steve. We had Speaker Boehner go to the White House at 5:30. And
according to both my Democratic and Republican sources, Speaker John
Boehner at that meeting floated a grand bargain of sorts, something to
combine the debt limit with the C.R., and to try to get some combination
deal, and another piece of the news is that earlier today and during the
afternoon, Speaker Boehner met with several Republicans in his office and
talked about the potential grand bargain and how he`d like to work in that
direction.

KORNACKI: So, we were just talking about the weakness he has, the
sort of the lack of trust, the basic lack of trust that defines his
relationship with the Republican base, and the conservative in the House.
And we think back to the last grand bargain negotiation in 2011 where at
the end of the day, John Boehner had to sort of walk away from it because
he did not have that support from his own members, presumably, this would
involve -- if this is real, if this is something Republicans pursue, and
this is something Democrats decide they`re willing to at least entertain,
this would entail real negotiations between the two parties.

Is the John Boehner we were just describing, the John Boehner you were
telling Ezra Klein all about, is does he have the support to negotiate with
the Democrats about something like this?

COSTA: I don`t think he has that much support, but he does have the
ambition to seek a grand bargain. And this is the John Boehner from 2011,
from even the fiscal cliff, trying to broker some kind of bipartisan pact.
But as you said in your introduction, I think you had it spot-on, since the
fiscal cliff, John Boehner`s arm really has been crippled by a block of
about 30 to 40 conservative Republicans in the House. They really have
stopped him from any kind of negotiations, they are obsessed with the deal
that you don`t have regular order or closed door talks with the president,
and this puts John Boehner in the corner everybody on Capitol Hill.

But at the same time, he is that Washington lifer you mentioned,
Steve. He is someone who wants to do something big before he retires.
That`s what makes this flotation tonight of a grand bargain, you have to
throw cold water on because of his limited hand, but at the same time, you
know he`s working in that direction, and I hear Paul Ryan is trying to help
him.

KORNACKI: You know, we talk about it and I wonder if you could sort
of explain maybe the math a little bit of -- in the anthropology maybe of
the Republican conference on the House side, because we talk about this
group of two dozen, three dozen, maybe sort of hard core conservatives who
are really sort of -- the ones John Boehner really has to worry the most
about. At the same time we`re talking about dozens, maybe more than 100,
maybe 150, I don`t know what the exact number is, who apparently are
content to be quiet in all of this.

Maybe they secretly would like this to be over with, they secretly
like to just vote to reopen the government, but they`re not speaking up and
saying it.

What`s the calculus for those members, the great silent majority on
the Republican side?

COSTA: You`re right. And it`s a great question because when you
think about it, 30 to 40 members, they don`t really -- 10 percent of the
House, it is not a big number. So, a lot of people won der, how can this
group of 30 to 40 conservatives so dominate the discourse within the
Republican conference?

It`s because that silent majority of House Republicans, those are more
-- a little conservative, more to the center, they stay silent because of
pressure from that block, pressure from the conservative movement and talk
radio, and other interest groups on the outside. And so that little group
is a little group. They`re able to force Boehner`s hand and really shape
the conversation day in and day out on Capitol Hill.

KORNACKI: And finally, Robert, given just the basic lack of trust
that we`re describing for John Boehner, that sort of really hampers him --
I`m wondering, are there any Republicans in leadership, any other
Republicans in the House who may step forward, who may or may even be able
to lean a little bit here, who have a little bit more trust. I`m thinking
specifically of Paul Ryan?

He has been quiet this week. Should we expect to see more from Paul
Ryan in all this? Is there any conversation between Paul Ryan and John
Boehner about Ryan playing a role in ending this?

COSTA: Ryan is Boehner`s top ally right now. He really has Boehner`s
trust. They developed the friendship over the past two years. And Ryan is
someone who can be Boehner`s conservative whisperer, he`s someone who --
Boehner does have that trust gap with conservatives as you mentioned. But
at the same time, Ryan has their trust, he`s considered a movement member.

So, John Boehner is going to work through Ryan perhaps to try to sell
a grand bargain. It`s going to have a difficult path ahead. But at the
same time, there is a chance if Ryan is moving John Boehner out to get
something moving forward.

KORNACKI: All right. Paul Ryan, the conservative whisperer. I guess
that`s his new name.

Robert Costa, Washington editor of "The National Review" magazine --
thanks for your time.

COSTA: Thank you.

KORNACKI: Among the many amazing things about Republican action this
is this amazing thing. They have already won the fight we are scheduled to
be having. A Democratic member of Congress joins us next to help explain.

(COMMERCIAL BREAK)

KORNACKI: Just when we`re about to consign Newt Gingrich to the
scrapheap of history, here he is newly, weirdly relevant -- everything old
again is Newt again. It`s just ahead.

KORNACKI: Earlier this evening, the president met with top
congressional leaders in the White House, in the hope they could bring an
end to the shutdown. When they emerged, it seemed like very little head
changed.

(BEGIN VIDEO CLIP)

REP. JOHN BOEHNER (R-OH), SPEAKER OF THE HOUSE: The president
reiterated one more time tonight that he will not negotiate. We`ve got
divided government. Democrats control the White House and the Senate. The
Republicans control the House. We sent four different proposals over to
our Democratic colleagues in the Senate, they rejected all of them.

SEN. HARRY REID (D-NV), MAJORITY LEADER: My understanding that
Speaker Boehner said that Democrats won`t negotiate. What the speaker has
to accept is yes for an answer.

REP. NANCY PELOSI (D-CA), MINORITY LEADER: I don`t know why they
haven`t accepted their own number. We stood on the steps of the Capitol,
with 100 members, as I said, with the support of the other members of the
caucus to say we`re making a firm offer to the speaker as to we`re willing
to compromise to accept their number.

(END VIDEO CLIP)

KORNACKI: Sort of looks like House Republicans don`t know when they
won. House Speaker John Boehner came out of tonight`s meeting saying he
will not bring a clean C.R. to the floor.

So, here I a trivia question for you -- if Republicans just gave up
right now, said, OK, Democrats, you get your way, we`ll stop trying to keep
the Affordable Care Act from passing, and a clean bill you keep talking
about and we`ll reopen the government, if Republicans did that a that, here
is a question, what would happen?

The answer: they`d still win. We can explain why in one bar graph and
here it is. Let`s go through this piece by piece.

The thing to remember the shutdown which is the failure of Congress to
authorize government spending is not actually about government spending.
When President Obama came to office in 2009, he put together a budget that
would have been enacted would have set spending for the year 2014 at $1.2
trillion. Now, Congress was controlled by Democrats, but they didn`t adopt
President Obama`s budget. They did authorize just about the same amount of
spending, though, $1.1 trillion. You can see it there on the bar
autograph.

Then, 2010 happened, Republicans took over the House. In the summer
of 2011, they forced what was an unprecedented fight over the debt limit,
which resulted in significant spending cuts. The Republicans wanted more
than that. A condition of the deal was that spending would be slashed
further if a comprehensive bipartisan budget wasn`t passed in the next year
and a half.

Of course, the deadline for that comprehensive bipartisan bill came
and went this spring. And so, forgive me, we have what`s known as the
sequester. And now, those deep cuts that everybody used to say were a bad
deal, now, Republicans have decided that they kind of like them, so they
seem to be here to stay -- which brings us to the government funding bill
that the Senate keeps passing and that House Republicans keep rejecting.

This is the clean funding bill the Democrats keep telling Republicans
they should just suck it up and pass. That clean funding bill is for $986
billion, $986 billion you see right there. How small is that number? It`s
only a few billion more dollars that Paul Ryan proposed. That is Paul
Ryan, the same Paul Ryan whose budget was thought by Democrats to be
impossibly small.

Here is the kicker, every bill the House Republicans sent to the
Senate contains the exact amount of spending, the same $906 billion.

The fight now is not about money. It is only about Obamacare. When
it comes to how much the government will spend when it reopens, if it
reopens, there is now no difference between the two parties in Washington.
Keep that in mind -- if the Republicans do back down on Obamacare, if they
do end up accepting that clean funding bill and letting the government
reopen.

You might here Rush Limbaugh or Jim DeMint and one of them call John
Boehner a traitor if that happens, but when the government opens for
business again, it will be operating on Republican budget terms. That game
is already over and Republicans have won it.

Joining us is Congresswoman Diana DeGette of Colorado.

Congresswoman DeGette, thank you for your time tonight.

I guess I want to pick up that point because this is sort of the
forgotten fight, if it`s forgotten, it is because the fight really has not
been waged. But it seems to me, we talk so much about how Republicans were
able to -- I try to hesitate to use the term "sequester" here, but how much
Republicans have been able to reduce the size and scope of the government
through the sequester. What sort of is forgotten here if the government
reopens, the sequester is still in place. That`s part of this fight.

Did Democrats make a mistake here, did your party make a mistake by
not having that fight as part of the shutdown battle?

REP. DIANA DEGETTE (D), COLORADO: Well, the problem is that the
Republicans have insisted on putting this completely irrelevant issue, one
that they know the White House won`t compromise, one that they know that
the Senate won`t compromise on, and that`s the Affordable Care Act. It has
nothing to do with the budget.

And so, now, a lot of people are saying, well, you know what? Just
take the so-called clean C.R. But it is not clean at all, because it does
have the sequester in it.

And so --

KORNACKI: But, Congresswoman, it seems like you have ended up in a
situation, I don`t know if this is by grand design on their part or just a
happy coincidence for them. But you ended up in a place where exactly what
you described is happening, where Democrats are saying, wow, this is so
spectacularly unreasonable, fine, have your sequester, we just want
Obamacare to be left alone, we just want the government to open, we just
don`t want a debt default -- should Democrats have been applying pressure
the other way so that the terms are not just that, they are oh, by the way,
do something about the sequester, too?

DEGETTE: Well, don`t forget, this C.R. is only six weeks. It only
goes into the middle of November.

In my opinion, what we should be saying is, OK, you can have your
sequester for six weeks. But in the meantime, you`ve got to reopen the
government, and you have to raise the debt ceiling with no limits --
without putting all of these ridiculous extraneous issues on the debt
ceiling, too, like they`re talking about.

So, for six weeks, if we can open the government and do that, and come
up with what our appropriators call really a grand bargain, which is a
budget for 2014. That would make a lot of sense to me. And even I,
somebody who vociferously opposed the sequester from day one, I would hold
my nose and vote for a six-week extension, but I`m not going to hold my
nose and vote for anything more than that.

KORNACKI: Well, actually, we were talking with Robert Costa about his
earlier, the idea maybe sort of we`re not sure yet, that Republicans and
John Boehner are open to pursuing some kind of grand bargain. Again, you
look at the history of John Boehner and the Republicans on the lines they
have drawn in this, which is basically absolutely no new revenue.

Do you think if those talks reopened again in any way, do you think
anything is going to be different in terms of the Republican bottom line,
which is absolutely no new revenue, which sort of blows up this whole idea
of the grand bargain?

DEGETTE: Well, actually the people I talk to on a private basis think
the only way out of this box is a grand bargain, because if you look at the
effect of the sequester on the National Institutes of Health, on all of the
programs that we care about for our districts, Head Start for the kids, and
for seniors programs, the only way out of the sequester which gets very
much worse on January 1st, 2014, is by doing a grand bargain.

And more and more people are privately talking about that. So, in a
way, as much as I abhor this shutdown and think that it`s really political
malpractice, I think it maybe the path towards a much bigger issue.

And you know what I tell my Republican friends is I say, look, if your
business community wants this, your constituents want this, what they want
is certainty for a year, not just for six weeks, not just for two weeks,
not just until the debt ceiling comes up, because they want to know that
they can hire employees and that we will have a federal government
operating. And that we will be paying the debts of our government.

KORNACKI: All right. Congresswoman Diana DeGette of Colorado, thanks
for your time tonight. We appreciate it.

DEGETTE: Thank you.

KORNACKI: We all know where we are, but why are we here is a very
different question. One possible answer is coming up.

(COMMERCIAL BREAK)

KORNACKI: There is a TV channel where you can watch American politics
completely uninflected, and there, my second favorite channel ever, lies
the answer to almost every question, including, how did we get there?

It started before there were all these cable news channels, with the
man who is still on the cable news channel, and every bit of it, from Ted
Cruz to the Tea Party Caucus in the House, to John Boehner`s big problems,
every bit of it can be traced back to a man named Newt Gingrich. The
archives don`t lie, stay tuned.

(COMMERCIAL BREAK)

(BEGIN VIDEO CLIP)

SEN. TED CRUZ (R), TEXAS: I would note that it was at the same time
Bob Dole was on the ticket, getting just 40 percent of the vote nationally,
Republicans picked up two Senate seats. So, the sort of cocktail chatter
wisdom in Washington that oh, the shutdown was a political disaster for
Republicans, it is not borne out by the data.

KORNACKI: Chances are, you heard some of that in the past few days,
the idea that the last time of the government shutdown, back in 1995 and
1996, Republicans didn`t actually pay a price. The Tea Party Republicans
are desperately trying to keep the House GOP from going wobbly right now,
this is one of their favorite talking points, one they`re pushing very
hard.

It`s not just Tea Partiers who are saying it. The people at Gallup
put a bunch of polling data together from 1995 and 1996, with the
headlines, "History shows shutdown stakes may not be that high."

Basically, what Gallup points out is that Bill Clinton`s approval
rating didn`t actually spike in the months after the shutdown. It was in
the low 50s before the shutdown and it was in the low 50s after the
shutdown. Also points out that Newt Gingrich`s approval rating didn`t
actually get worse. It was bad before the shutdown, bad after the
shutdown. This is all true enough.

And it`s also true when voters went to the polls in November 1996,
Republicans lost a net total of only three seats in the House and they
actually gained two in the Senate.

So, yes, you put all of this together and you can make the case that
the `95 shutdown really didn`t hurt the Republicans all that much. But the
thing is that`s only part of the story. The full version is a lot more
complicated, because there was more damage inflicted on the Republican
Party in the 1996 election, the it`s damage that the party is still dealing
with and still living with today.

Basically, it was the 1996 elections, this was the first election
after the 1995 shutdown, and the first election after Newt Gingrich and his
conservative revolutionaries took control of Congress. It`s the first
election that took a bunch of swing states and turned them into deep, dark
blue states.

Take for example, New Jersey, the Garden State. For decades, from
World War II to the Reagan and Bush Sr. years, from the fall of a
presidential election rolled around, there were two things you could count
on in New Jersey, the Rutgers football team would be bad and the state`s
voters would go Republican. Heading into the 1992 election, the state had
voted for the GOP in six straight presidential elections.

And in 1992, Bill Clinton managed to eke out a win, and eke out really
is the way of putting it. It was only by two points that year.

But now, look at what happened just four years after that. In 1996,
Bill Clinton wins New Jersey again, this time his margin explodes, 18
points more than he beat Bob Dole nationally. That is a huge swing. And
there is a reason for it.

New Jersey swing voters were and really they still are moderates.
They`re suburbanites. They`re liberal on cultural issues. There may be a
little less liberal in economic issues.

For years, they`ve been open to supporting Republican candidates. But
that all changed when Newt Gingrich and the GOP took control of Congress in
1995. Suddenly, those swing voters in New Jersey were forced to confront
what the Republican Party had become, how far to the right is it moved.
And they didn`t like it.

The shutdown wasn`t the only thing they didn`t like. It wasn`t the
only source of this backlash. But to these voters, it was the most
dramatic and most vivid illustration that the Republican Party they had
happily supported for years was now something quite different. New Jersey
was a swing state before 1996, but ever since then, no one has even
bothered to contest it. It is a safely blue state. It has been taken off
the board completely in presidential races.

This didn`t just happen in New Jersey, it happened across the
Northeast, look at New Hampshire, live free or die New Hampshire. This had
been the most Republican state north of the Mason-Dixon line forever.
Ronald Reagan had won it by 40 points, George Bush, Sr. by nearly 30 points
in 1988.

Because the economy was so weak, Clinton managed to win it by a single
point in 1992, and then in 1996 when he won it by 10. So, it was another
huge shift.

Since then, the Democrats have won New Hampshire all but one since the
presidential race, and with the switch of just 3,500 votes in 2000, it
would be a clean sweep for them. Connecticut, Maine, Vermont, Delaware,
California, Washington, Oregon, Illinois, Michigan -- a whole bunch of
states that were in play, that were winnable for Republicans all the way
through the Reagan and Bush Senior years.

It went big for Clinton in `96. They hadn`t looked back since. They
have voted only for Democrats ever since then. Now, no, the 1995 shutdown
isn`t the only reason this all happened. There are a lot of other factors.

But the real story of the `90s, is that both parties sorted themselves
out. The clear and deep cultural and geographical divisions between
emerged them, the states with conservative voters especially states in the
South stopped voting for Democrats. They painted themselves deeply red.
Other states, the states I just talked about, went the other way.

And it left us with the basic red state/blue state divide we know now.
The question is whether that`s sorting out, that red state/blue state
divide that in a lot of ways is the legacy of the last shutdown, whether
that means Republicans really might not pay that much of a price this time.

Does the damage that they did to themselves last time mean there is no
more damage to be done this time?

Joining us now to sort this out is Democratic Congressman Bill
Pascrell of New Jersey, who first won his seat in 1996, beating the
Republican incumbent who was part of the 1994 republican landslide.

Congressman Pascrell, I remember you from my New Jersey days, thank
you for being here tonight.

I wonder if you could just start out by talking to people a little bit
about your experience in 1996, running against the Gingrich shutdown,
running against the Gingrich Congress, what that experience was like and
whether you think the same climate can exist in 2014.

REP. BILL PASCRELL (D), NEW JERSEY: There are some similarities,
Steve, between the `96 -- when you look at the `96 election and look at
what the possibilities are for 2014.

If you remember in 1996, our efforts, if you look at every one of
those races, particularly the ones that changed from the Republican to
Democrat, the focus was Newt Gingrich. The focus was his leading the
Republican Party at the time where they closed the government down. And
that the Republican congressional candidates, many of whom were incumbents,
were like puppets of Newt Gingrich.

And they suffered in that election. We didn`t take over the House,
but they suffered tremendous amount of losses in the `96 election,
particularly in the House.

And you know, Newt Gingrich knew that the people he brought into
office in 1994, the revolution as he called it -- and it was a revolution,
no question bit, he worked hard to make a Republican majority -- were the
same ones that turned against him in `98 when he moved out of the House of
Representatives for multiple reasons. He brought people in that never had
any experience in government, that were true believers, that were almost
iconoclast, and did not believe really in the democratic process of
everybody is equal to the table when we debate.

And that`s what you might have this year. I`m not saying that I can`t
prognosticate, I cannot predict what`s going to happen in 2014, but I have
a good feeling that wee done, the Democrats have done the right thing.

When they say we`re not willing to negotiate, that is so much bull it
is not funny. They had six months to negotiate the budget. The Senate
passed the budget, they were always criticizing the Senate for not passing
a budget. The House passed the budget.

The protocol means you bring both parties of together, and you sit
down and you come up with a compromise. They wished not to do that. This
was planned, this closing. This was a gift to the far right of their
party.

I don`t blame the far right. I blame the Republican leadership and
that`s what happened in `96. And that`s finally happened when Clinton ran
for president.

KORNACKI: But what about, Congressman, the difference we sort of
getting at in the intro there, like, look, you can look back at `95 and
`96, and say a state like New Jersey, Bush Sr. carried it, Reagan carried
it. That was something the Republicans could lose in the `90s, and they
did lose it, they lost in Northeast, they lost the Pacific coast, they had
a lot of congressmen in districts like yours who can win before the
Gingrich shutdown who can`t win anymore.

Is there anything left for them to lose or have we reached the point
where for the Republicans, the biggest threat is the Republican primary and
it doesn`t give you guys as much leverage?

PASCRELL: Nothing is impossible to overcome. Steve, if you remember
my election in 1996, my opponent who was the incumbent at the time, had so
much money, he had more money than Carter had liver pills in the `96
election. But you want to know something, when you continue to fight for
what you believe in, be you a Democrat or Republican, you work hard at it.

What`s happened in this election as we look forward to 2014 is they`re
relying on a right wing take-over of the federal government -- that`s not
going to happen. What Boehner has allowed to happen, beginning in 2011,
was for the right wing of this party to start calling the shots. To keep
them in line, to protect his own leadership.

I like John Boehner. I happen to think that he is a good American and
wants the government to really do what we`re supposed to be doing, is that
we`re helping people where people can`t be helped any further by their own
initiatives.

I personally believe that he is in for a sad awakening next year. And
I would like him to stand up and say let`s have a clean vote on the budget.
That is what we need right now. Let`s get on with the other issues of the
debt. Let`s get on other issues of where this country is going in terms of
its investments, if you look at the last four months in terms of economic
growth. If you look at the housing prices, if you look at where mortgages
are going and where -- now we have a decline, thank God, in foreclosures.
We`re going in the right direction.

But these Republicans don`t want this president to succeed. And
that`s where it is at. People aren`t dumb. They can understand this.

I support the health care act. I think it`s going to work. They
don`t want it to be successful. Why not? Should they have a plan to take
the place of the ACA, the Affordable Care Act? They don`t have anything,
all they have is rhetoric.

KORNACKI: All right. Congressman Bill Pascrell of New Jersey, no one
can ever accuse you of hiding your true feelings. Thank you for joining us
tonight.

PASCRELL: Thank you, Steve. It`s always a pleasure to be with you.

KORNACKI: Appreciate it. Good to see you.

And we will be right back after this.

(COMMERCIAL BREAK)

KORNACKI: Just a few hours ago, the Republican House passed on a
mostly part line bill, the stopgap bill to fund the National Institutes of
Health. You can call this a piecemeal strategy, and it works like this --
government funds a cancer clinic in Maryland, the government shuts down,
the clinic doesn`t get its funding. Those kids with cancer are turn away
and don`t receive their experimental cancer treatments. It is a very bad
situation.

It`s also political poison to be associated with it. So the
Republicans have made a big to do about keeping this clinic open. The
Democrats see it as a trap, because if they go along and fund only random
parts of the government, and not the whole government, just the parts the
Republicans don`t want to be associated with closing, how do they ever get
the GOP to reopen all of the government. And Democrats might just be able
to get Americans to see it this way if they didn`t accidentally say things
like this.

(BEGIN VIDEO CLIP)

REID: Listen, Senator Durbin explained that very well, and he did it
here and did it on the floor, as did Senator Schumer. What right did they
have to pick and choose what part of government is going to be funded?
They have no right to pick and choose.

REPORTER: But if you can help one child who had cancer, why wouldn`t
you do it?

REID: What -- why would we want to do that?

(END VIDEO CLIP)

KORNACKI: And with that, 27 million FOX News segments were born.

Joining us now is Suzy Khimm, MSNBC.com reporter. Her latest article
about the shutdown just went online at TV.MSNBC.com.

Susie, thanks for joining us.

I love these moments when politicians slips like Harry Reid did today.
I guess the gaffe is the cliched way to describe this. This is going to --
this spawned, as I said, a million new talk radio, FOX News segments. I
guess the question is, I`m trying to separate the noise of the moment from
sort of those longer term reality.

Do you think what Harry Reid said today, sort of falling into the
Republican trap on this, do you think this has ramifications for how the
public perceives the shutdown and for any of the negotiations we`re now
talking about?

SUZY KHIMM, MSNBC.COM: That`s the hoop of the Republicans.
Basically, they staged a series of votes, all of which President Obama said
he would veto that would fund popular parts of the government. They`re
basically, it`s sort of government ala carte. The stuff that everyone can
agree on that they like -- troops, veterans, kids with cancer, that sort of
stuff.

I do agree, though, that there is a danger that Democrats can go down
this sort of slippery slope. If we spend the entire time putting the
government together piece by piece, this could take weeks if not months,
the government is very large, the shutdown does hurt a lot of people. So
it is politically treacherous, and I think that is the Republican hope that
that narrative can sort of take over the Republican shutdown the government
narrative.

KORNACKI: Do you think right now the Democrats are basically holding
strong against it, they have the Senate where they can sort of put a stop
to this. If they stand together and they say we`re not going to do this.
But are there signs and do you think there`s any possibility that there
will be some uneasiness among Democrats, maybe from more marginal
districts, from red states, that sort of thing, where they say, you know,
maybe we should go along with reopening this one thing, and that creates
that slippery slope, you know, how you open this and not that.

Do you there`s any possibility at least to that, or Democrats really
going to stand strong on this?

KHIMM: I think the Democrats are going to stand strong. I mean, the
issue comes and you will hear this again. The shutdowns have only been in
place for two days. We`re going to hear more kinds of horror stories along
the way. And that`s going to raise sort of more questions, like, you know,
if someone gets infected by a disease because they ate a piece of food that
was imported. And the imported food is not being inspected right now?
Then, do we fund the CDC?

And so, as time progresses, yes, I believe the pressure will go
greater. But at the same time, I think folks will realize that actually a
lot of people across the board are being hurt by the shutdown, it is not
enough to just choose and pick which agencies you like to stay open.

KORNACKI: Well, you know, the possibilities for demagoguery here are
really kind of endless. So, it seems to me, maybe it is a little too
complicated. But is there a strategy here for Democrats where it`s like,
you know, there wasn`t anything you can`t look at Republicans and say, why
don`t you open this, why don`t you open that? Maybe it will take a while,
but maybe this is a back door to reopen the government. I don`t know.
That`s probably over-thinking it.

KHMM: I mean, the question that Democrats need to throw back to
Republicans is, why aren`t we opening everything? And there actual answer
is, well, because we shut down the government over Obamacare. But the
curious thing that I noticed that I pointed out in my story, is the fact
that Republicans are talking less and less about Obamacare. The reason
they supposedly did all of this inflicted all this harm to begin with.

I think it`s because they have held vote after vote. It`s gone
nowhere. And so, they need a new narrative. If Democrats throw out the
question why we are in this place in which we are having to possibly make
tough decisions to begin with, that`s really going to point out the flaw in
Republican strategy going this piecemeal approach.

SEN. TED CRUZ (R), TEXAS: If the Senate cooperates we would get this
passed by the end of the day. We could respond to the national security
threat these two gentlemen have laid out. And the only impediment to doing
so is the prospect that Majority Leader Harry Reid would object to doing
so. If God forbid we see an attack on the United States because the
intelligence community was not adequately funded, every member of this
committee would be horrified.

(END VIDEO CLIP)

KORNACKI: That was the freshman senator from Texas, Ted Cruz, earlier
today, warning that the government shut down could lead to a terrorist
attack in the U.S.

Does Ted Cruz remind you of anyone?

Let me give you a clue. Just last week, Cruz staged a spectacle of
sorts in the Senate, rambling on the Senate floor for 21 hours and 19
minutes. Does that remind you of any one?

Try to give you the answer. His name, style, tactics in Congress,
they are rooted in something that happened years ago. Back when Ted Cruz
was just 13 years old, back in May of 1984.

(BEGIN VIDEO CLIP)

ANNOUNCER: This is "NBC Nightly News" reported by Tom Brokaw who is
off today.

JOHN PALMER: They`re having a family feud on Capitol Hill over
television, and who will be on it. House sessions have been carried on a
special cable TV channel lately. But now, the Republicans say the
Democrats especially House Speaker Tip O`Neill, are trying to control this
particular airwave.

(END VIDEO CLIP)

KORNACKI: That special cable TV channel that John Palmer, he`s the
anchor you just saw there. The special cable TV channel he was talking
about was C-Span, delivered gavel-to-gavel coverage of every session and
all sorts of public affairs programming to fill out the rest of hours.

In the niche world of cabled, C-Span has been such a hit there are
three of them. Three different C-Span channels if you can believe that.
But in 1984, C-Span was five years old. Cable television itself wasn`t
much older.

That is where Newt Gingrich comes in. Newt Gingrich recognized before
just about anyone else in Congress the potential significance of cable
television, the potential significance of having a cable TV channel devoted
to showing everything happening on the House floor without any commentary,
without any interruption.

Gingrich was total outsider back then. He was an irritant to
Republican leaders. Congress was a very different place back then too.
There were real authentic moderate Republicans, liberal Republicans, there
were lots of them.

Gingrich took charge of a small band of conservative back benchers.
The mission was ideological, but it was also tactical. No more
compromising with Democrats. Just open partisan warfare.

This was their vision. It was a vision that resonated powerfully with
the conservative grassroots. And C-Span was integral to the Gingrich game
plan.

House rules allowed for something called special order speeches. So
members could take to the floor after hours and hold court on any subject
they wanted. No one ever did it. What was the point of droning on to an
empty chamber?

But when C-Span turned its cameras on, that changed the equation. The
chamber was still empty. For the first time, ever, any American with cable
television could watch at home. Gingrich got this. He got it right away.
He and his crew, it`s a bunch of back benchers remember, they started
gobbling up special orders time.

It was night after night, they stand on the House floor and they take
turns, railing against Democrats and preaching the conservative gospel as
they defined it.

FORMER REP. NEWT GINGRICH (R), GEORGIA: I`m going to pick up where
Mr. Walker left off on the document entitled, "What`s the matter with the
Democratic foreign policy" by Mr. Frank Gregorsky (ph).

(END VIDEO CLIP)

KORNACKI: Remember, there was no FOX News back then. Rush Limbaugh
was just an ex-disc jockey working in PR for the Kansas City Royals. Talk
radio, conservative talk radio, it was still in its infancy.

Newt Gingrich and his buddies talking for hours on the House floor on
C-Span, this became a thing for conservatives across the country. They
would tune in. They would absorb the message. Feel the outrage. They
would embrace the cause.

And then came the night in 1984 when Gingrich read off the games of 10
Democratic congressmen who signed a letter to Daniel Ortega. It was the
Sandinista leader who seized control of Nicaragua and they urged him to
hold dramatic elections. And they had, Gingrich thundered on the House
floor, undercut and crippled the foreign policy of the United States.

He suggested prosecution under an 18th century law. He all but
accused them of treason. And it was then, only then, the speaker of the
house, Tip O`Neill, the old Democrat from Cambridge Mass, only then he
knows what was happening, and he ordered a new policy. From now on,
O`Neill decreed, the camera in the House would pan periodically during
special order teaches to show viewers at home that the chamber was empty.

Next time Gingrich called Democrats no one would think the Democrats
were just sitting there and taking it. And that decision by O`Neill set
the stage for an infamous day in the history of the House, the day that
made Newt Gingrich. It was 10:00 a.m., May 15, 1984, this time, the
chamber was full. Gingrich got the fight with Tip O`Neill he had been
dreaming of for years.

(BEGIN VIDEO CLIP)

THOMAS P. O`NEILL, THEN-HOUSE SPEAKER: You deliberately stood on the
well before an emptied House and challenged these people and you challenged
their Americanism, and it`s the lowest thing that I have ever seen in my 32
years in Congress.

O`NEILL: As a matter of fact I was expressing my opinion, very
mildly, because I think much worse than I said all.

GINGRICH: In many ways, it is my patriotism being impugned. What we
are seeing comes all too close to resembling a McCarthyism of the left.

(END VDIEO CLIP)

KORNACKI: It really is impossible to overstate what this did for
Gingrich`s place in his party. GOP`s leadership spent six years ignoring
him, treating him like a gadfly. But now, he baited Tip O`Neill, the face
of the National Democratic Party, into a fight -- a fight that made
national news. It was a fight in which O`Neill became the first House
speaker in nearly 200 years to have his word taken down.

This was Newt`s game, exploiting television to appeal directly to the
grassroots, to convince conservatives across America that he was only
Republican in wash work who was really going to fight for them. This is
how he made his name. Not guy passing laws. Not by chairing a committee.
Not by working with his colleagues.

It`s he same outside game that Ted Cruz played last week, the game
he`s trying to play again today, using stunts to make himself a hero to the
base, the kind of hero that any Republican looking to get ahead in this
world will think twice before attacking. Newt Gingrich, more than anybody
else, may be responsible for where we are, what we are now seeing playing
out inside the halls of Congress. He wrote the script and Ted Cruz is
following it to a T. So, here we are, now barreling towards day three of
the first government shutdown in nearly two decades. No end in sight.

Newt Gingrich may be gone, but his legacy absolutely lives on.

That does it for us tonight. Rachel will be back tomorrow. And I
will see you Saturday morning at 8:00 a.m. Eastern for my show "UP".

Now, it`s time for "THE LAST WORD WITH LAWRENCE O`DONNELL".

Good night.

THIS IS A RUSH TRANSCRIPT. THIS COPY MAY NOT BE IN ITS FINAL FORM AND MAY
BE UPDATED.
END

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